Pak Sudarno Case Study

Abhijit Banerjee (2011) describes the case of Pak Sudarno who wanted nine children. His large family was not the product of lack of self-control, lack of access to contraception, or even a norm imposed by society (although the fact that he got to make this decision may have been; his wife did not tell us what she would have wanted herself). At the same time, he believed that having nine children made him poor. So he did not really “want” so many children. He only needed nine children because there was no other way for him to be sure that at least one of them would support him later in his life. In an ideal world, he would have had fewer and tried to raise them as well as he could, but he would not have had to depend on them later. Although …show more content…
Specifically, it must be borne in mind that outcomes, like earnings, weekly wages, and income, are the product of two distinct (yet related) economic processes. The first is what economists refer to as the wage rate, or the amount an individual receives for each unit of time worked (e.g., hourly wage). The second component involves the outcomes of whether or not the individual works at all, and if so, the amount of labor the individual actually supplies to the labor market (referred to as labor supply). Earnings as generally defined are the product of the wage rate and the amount of labor supplied. Indirect effects of drinking and problem drinking may be as important as the direct effects. Thus, an important line of research would be to obtain more detailed and reliable information on the magnitude and type of indirect effects. Indirect effects could include the quality and quantity of schooling attainment, the formation of households, the choice of spouse and friends, the level and quality of labor market experience, and other key components of human capital is of considerable …show more content…
The decision to miss work on what would otherwise be a scheduled work day is in essence a decision to not supply labor to the market on that day. To the extent that drinking and/or drinking problems are found to be determinants of work loss, it is thus reasonable to interpret such relationships within this broader context of labor supply and employment issues.

At the conceptual level, the important consideration is that alcohol use and/or problem drinking may have distinctly different implications for each of these components of earnings or income.

One final methodological issue arises when income is used as a measure of labor market productivity. Transfer payments and income earned or generated by other household members can be a part of measured income. However, this can create problems of interpretation. All else being equal, higher levels of transfer payments should represent lower productivity, since eligibility for and receipt of public transfer payments often coincide with subpar productivity. However, to the extent that measures of individual or household income include transfers received by the individual or household, then precisely the “wrong” signal is being sent by reference to such aggregated income data. Analogous, albeit somewhat more complex, arguments apply when analyzing household income measures. All else being equal, it is recognized